The Japanese Yen (JPY) struggles to preserve its intraday gains against the US Dollar (USD) and lifts the USD/JPY pair above the 144.00 mark during the early European session on Friday. Following the previous day's pullback from a two-week high, the US Dollar (USD) regains positive traction in the wake of a further recovery in the US Treasury bond yields. Meanwhile, a downward revision to Japan’s third-quarter GDP print, along with a generally positive risk tone, undermines the safe-haven JPY and turns out to be another factor lending support to the major.
The upside for the USD/JPY pair, however, seems limited amid bets that the Bank of Japan (BoJ) wind down its ultra-dovish, stimulus-heavy policies in 2024. In fact, BoJ Governor Kazuo Ueda on Thursday, emphasized the necessity of continuing the loose monetary policy in the near term and talked about options while moving away from negative interest rates. Ueda's comments reaffirmed market speculations about an imminent shift in the BoJ's policy stance. Apart from this, dovish Federal Reserve (Fed) expectations should cap the USD and act as a headwind.
Traders might also prefer to wait on the sidelines ahead of the release of the closely-watched US monthly employment details, popularly known as the Nonfarm Payrolls (NFP) report on Friday. Investors will look for cues that the historically tight US labor market is loosening, which might force the Fed to start easing the monetary policy as early as March 2024. Nevertheless, the data will play a key role in influencing the near-term USD price dynamics and provide some meaningful impetus to the USD/JPY pair, which remains on track to register losses for the third straight week.
From a technical perspective, spot prices on Thursday showed some resilience below the 61.8% Fibonacci retracement level of the July-November rally and the very important 200-day Simple Moving Average (SMA). However, the USD/JPY pair, so far, has been struggling to find acceptance above the 144.00 round figure, which should now act as a key pivotal point for short-term traders. With the Relative Strength Index (RSI) on the daily chart flashing oversold conditions, a sustained strength beyond might trigger a short-covering rally and allow the USD/JPY pair to reclaim the 145.00 psychological mark.
On the flip side, the 143.00 mark now seems to protect the immedaite downside ahead of the Asian session low, around mid-142.00s, which coincides with the 61.8% Fibo. level. This is closely followed by the 200-day SMA, currently near the 142.30 region, the 142.00 mark and the 141.60 area, or the multi-month trough touched the previous day. Some follow-through selling will be seen as a fresh trigger for bearish traders and make the USD/JPY pair vulnerable to extend the downward trajectory further towards the 141.00 mark en route to the 140.80-140.75 zone.
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the weakest against the .
USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
USD | 0.04% | 0.16% | -0.11% | -0.23% | -0.21% | 0.15% | -0.10% | |
EUR | -0.06% | 0.11% | -0.17% | -0.29% | -0.28% | 0.08% | -0.15% | |
GBP | -0.16% | -0.12% | -0.30% | -0.39% | -0.40% | -0.02% | -0.24% | |
CAD | 0.11% | 0.15% | 0.28% | -0.12% | -0.03% | 0.25% | 0.00% | |
AUD | 0.20% | 0.28% | 0.40% | 0.10% | -0.01% | 0.37% | 0.16% | |
JPY | 0.22% | 0.29% | 0.42% | 0.10% | 0.01% | 0.42% | 0.15% | |
NZD | -0.13% | -0.11% | 0.02% | -0.25% | -0.38% | -0.39% | -0.22% | |
CHF | 0.07% | 0.10% | 0.22% | -0.06% | -0.18% | -0.15% | 0.20% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.
Read more.Next release: 12/08/2023 13:30:00 GMT
Frequency: Monthly
Source: US Bureau of Labor Statistics
America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.
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